Lehman Earnings, Rewards For Bad Behavior (LEH)

Lehman Brothers (NYSE: LEH) has finally pre-announced its earnings at -$5.92 EPS.  First Call had estimates at worse -$3.00 but no one is using that estimate based upon the recent mudslide and rumors. The company is selling a majority stake in its Neuberger Berman asset management unit and said it was going to spin off its commercial mortgage assets to shareholders and will have limited exposure there.  It also cut its annual dividend to $0.05 and the company is exploring strategic alternatives.

Lehman is also saying its tier-1 capital ratio is 11% and is taking $5.3 billion in gross residential mortgage related adjustments. Its gross mark to market adjustments are a negative of $7.8 billion and net mark to market adjustments were $5.6 billion.

Shares closed way down yesterday at $7.79 and are trading around $8.70 in the early pre-market hours.  While it’s up now, this is anyone’s guess after the recent slide.  It doesn’t sound like it has any merger deal being imminent based on the data seen so far. Dick Fuld’s days appear very limited.

Jon C. Ogg
September 10, 2008